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How could Internet start-up Webvan spend a billion dollars in two years before going bankrupt without ever turning a profit? Easy, you say. The businesspeople who conceived, implemented and guided Webvan and other famed gaffes were just dumb.
Not so, says Sydney Finkelstein. For Why Smart Executives Fail (Portfolio, $26.95), Dartmouth College business professor Finkelstein and a flock of grad students spent six years studying more than 50 colossal commercial screw-ups. The business leaders were almost always smart and had ample money, information and other resources. To find out what they lacked, researchers interviewed people from CEOs to middle managers at competitors, suppliers and the companies themselves.
They found stupid mistakes mainly result when leaders are out of touch with reality, communications break down, and flawed leadership styles block challenges to unrealistic visions. Want to stay out of Finkelstein's next book? Mistake No. 1, he says, is seeing yourself and your company as dominating your environment. As has been said before, don't believe your own press releases.
Pricing, promotion, publicity, place-the famed four Ps of marketing-need another: Purple Cow. That's bestselling marketing author Seth Godin's way of saying every business has to have something phenomenal, counterintuitive and exciting to grab attention away from all the brown cows out there. His new book, Purple Cow: Transform Your Business by Being Remarkable (Portfolio, $19.95) boasts a heliotrope Holstein cover and a payload of one- or two-page nuggets, such as a history of the first bread-slicing machine, which flopped until Wonder Bread marketed the concept into a hit 20 years later. The unorthodox approach works. From Godin's first tips-which include a compelling mini-essay on the importance of being first-to the time he winds up his advice by urging you to ask "Why not?", your attention is thoroughly grabbed.
Mark Henricks is Entrepreneur's "Smart Moves" columnist.